Who actually financed their DVC purchase?

[figmentfan0724]

DF and I financed our purchase through disney. We are also a young couple with very little expenses and right now finacing just worked for us. we have been paying more than necessary every month in hopes to have it paid off quicker!

 

[gkrykewy]

If I buy 160 points right now at $96/point and finance 90% ($13824) with a LOC at 7%, pay if off in 5 years and pay about $2500 in finance charges, my total cost is about $109/point once I figure in the tax deduction. And that does not take in account the developer points, which I can either get an additional trip or rent them out.

Or I could wait and save up the cash over the next 3 years, at which time its likely the points will cost somewhere in the $110 range.

Good numbers and a fair point. I was speaking mostly of Disney's 10.9% financing, and people who take the full finance period to pay them off.

 

[honeymo78]

We financed too. However, we don't plan on taking the full time to pay it off. For our normal disney vacations we generally use our tax refund plus our vacation savings fund. Even if we use the vacation savings fund just for tickets, food, airfare etc and don't touch the DVC with that money, we'll end up paying it off in about 3-4 years just from tax refund money. Sure we could have waited til we had all that money saved up, but that would mean not vacationing at all until we had the savings. I'd rather finance for a few years and still get to vacation.

 

[tjkraz]

Good numbers and a fair point. I was speaking mostly of Disney's 10.9% financing, and people who take the full finance period to pay them off.

Using the same assumptions that would have a cash buyer breaking-even in 6-7 years, we can figure someone who finances will take an additional 3-4 years.

Financing $15k at 11% over 10 years will result in interest payments of roughly $10,000. While that is a substantial amount of money, it doesn't extend buyers to the point where they would never break even.

It really is a difficult topic to broach. As I said previously, vacations are very important to personal well-being. And just because someone doesn't have $15k in disposable income sitting in the bank doesn't mean they can't afford $3000 per year for a family trek to Walt Disney World. And spending $3k cash per year is going to cost a lot more in the long run than buying into DVC--interest or no interest.

People living paycheck-to-paycheck--or very near to it--are certainly not good candidates for DVC ownership. But I also don't think it is exclusively for the wealthy either.

 

[supersuperwendy]

For us now the question is who to buy from and where to get the financing. How do you decide where to make your home resort? If you bought recently did the lenght of the contract come into play? I know we can currently buy AKV from Disney with some incentives. My preference though is The Boardwalk, but that has a shorter contract and involves finding a seller and getting through rofr.

 

[ClarabelleCow]

hmm - you have a trip coming up in 76 days, what are the penalties if you canceled? You could easily cancel and have that money also applied to a DVC purchase. Just a thought!!! Good Luck, we did not finance any of our purchases, with rates at 9.0+, and savings earning 2.0%, why keep it in savings. But we were lucky and had a few good years in a row!!

 

[puffkin]

We financed through Disney. It was easy and we already have a home equity loan for work we did to the house.

I look at it this way....we take 2 trips a year usually. My annual payments (dues/loan) about equal what I would be spending for 2 weeks at a moderate.

I would be spending that same money on Disney anyway, but once it is paid off in a few years I will have my ownership interest and just have to worry about dues. Plus I am getting Deluxe accomodations rather than the moderate that we can afford and the AP discount is great too.

We financed because we are young, and were starting a family. We used our wedding money as the down payment. With a family, we knew our disposable income would be severely limited for a few years, so we wanted to guarantee that we could take our kids to WDW twice a year. Best money we ever spent and it is just part of our monthly budget now.

 

[drag n' fly]

We financed because all of our money is tied up in our portfolio and kids education accounts. We just pay it off in cash when another chunk of cash comes in.

 

[gkrykewy]

People living paycheck-to-paycheck--or very near to it--are certainly not good candidates for DVC ownership. But I also don't think it is exclusively for the wealthy either.

I agree with everything you've said, except that I don't think having cash on hand for the purchase makes one wealthy - it's just a basic level of savings, and a preference on what best to do with them.

But you're right - everyone's circumstances are different, and financing the purchase would certainly not be disastrous. I would say that anyone who has no choice but to finance at disney's 10.9% rates probably shouldn't be buying DVC, since they probably have neither cash savings nor home equity.

 

[DisneyDreamers2007]

Personally, I won't finance anything except my home, we don't go on a vacation or buy a car unless we have the money in the bank to pay for it. We only put things on the credit card that are budget items and pay them off at the end of the month (we do this to earn airline mileage). This strategy has saved us tons of money in interest and lots of stress over the years.

One thing I have done is if I know for sure I will be able to pay for an item within a certain time period, I will put it on a 0% APR Credit Card. These rates are offered for a limited time (usually 6mo. to 1 1/2 years). Just make sure you mark the promo ending date on your calendar so you get the entire amount paid off on time, as a much higher rate will come into place after the intro rate expires. You could also transfer the balance right before that rate expires on the first credit card to another credit card offering a 0% APR on balance transfers if you needed more time. This strategy would allow you to get & use your DVC points earlier, without paying interest, if you know for sure you are going to be able to put that $800 towards it every month and pay it off at the end of the promo period. You could also earn credit card rewards as an added bonus.

Be very cautious when it comes to financing and credit. IMO this is a huge problem in our country right now. As an elementary educator, I find it sad that children learn every subject in school except how to budget and invest correctly. I'm hoping the recent mortgage crisis and banking fallouts will encourage schools to start teaching these fundamentals so that the next generation will make better decisions as they lead our country and lead their families.

There are lots of differing opinions on this matter and I wish you the best of luck in making the choice that is right for your family.

 

[JonS99]

Personally, I won't finance anything except my home,

Thats a concept I don't understand, borrowed money is borrowed money..

Anyway, to me, it makes no sense to be saving up to buy into DVC with cash and to go on a Disney trip(s) with a cash reservation, only difference is if you sending money to Disney via financing or a reservation..

 

[jenelope]

I financed my DVC purchase and I feel fine about that decision. I looked at the break even schedule and determined that even if I paid cash up front, based on my past vacation habits, I would never break even. I always stayed in a value resort, always used a discounted rate (AP or AAA), and traveled to WDW once a year. When I made the decision to buy DVC, it was really to make a huge change in the way that I traveled to my favorite vacation spot. I don't think that's a decision that can be made 100% based in logic. Sometimes you have to let the gut have a say in the matter. When I bought, it was the perfect time in all ways except for money. So I bought. That was 2006, so I've got two years worth of payments and four great vacations that would have been non-existent or very different. I do expect to pay it off early, but I don't know when exactly.

 

[supersuperwendy]

hmm - you have a trip coming up in 76 days, what are the penalties if you canceled? You could easily cancel and have that money also applied to a DVC purchase. Just a thought!!! Good Luck, we did not finance any of our purchases, with rates at 9.0+, and savings earning 2.0%, why keep it in savings. But we were lucky and had a few good years in a row!!

Believe me..I thought about it! But...we have others coming with us and already paid for flights and such.

 

[HomerHog]

Everyone has to do what is right for your situation. We purchased last year and financed a large portion of it. Our scheduled yearly cost for payment and dues for the next 9 years is about equal to what we would pay for a week at a deluxe resort. So for money we would spend anyway, we have 40 years ownership remaining which will have some value. Had we just taken the 10 vacations, we would have nothing left ahead of us.

Our DVC membership allowed us to host my entire family in 3 rooms at AKV for the trip that we never got to take when we were kids. We still might not have been able to take it if we were paying cash for those rooms.

We could have saved for 2-3 years to pay cash for the membership before we purchased, but we would never get back those 3 years when our kids are preschool and early elementary aged which have been awesome experiences so far.

If we chose to do so, we could pay it off by the end of this year. So I wish some of you wouldn't be so judgemental on how other people should spend their money everytime this comes up. Money is just paper. Experiences and memories cannot be replaced.

ETA: For those that pay cash or are saving, that is great. I am not here to make it sound like that financing is absolutely the way to go. It is what we thought was right for us at the time. There are pros and cons. Everyone has to evaluate their own situation.

 

[supersuperwendy]

So I see a lot of mixed opinions as to finance or not.

I also see some saying if we are going to finance anyway we shouldn't wait 6 months to save up..we should just do it now because the point values will continue to climb.

Soooo then guys.....If I wanted to buy now with financing..about how much $$$ do I need upfront? If we bought let's say 200 points at AKV....could anyone shed some light on that? Thanks!

And once again..thank you all so much for your input! I find invaluable!

 

[ericamanda01]

We financed it through Disney and have never regretted it a second! We even financed our add on!

 

[DisneyDreamers2007]

If I could pay upfront for my home I would, that would take a long time to save up for! A home is a necessity and also an investment, we could make at least 100K on our house we have owed for 4 years, even with the recent home values depreciating. I think it's an exception to the no financing rule, at least for now as we are a young couple.

I just have an affinity to financing and being hooked on too many monthly payments, as you never know when life & finances will change for you or someone you must help in your family.

But I do understand the logic for buying this way as listed in the last post, if the amount you are going to spend this year on a hotel is equal to the total amount of the finance charges you would pay over the life of the loan.

 

[HomerHog]

So I see a lot of mixed opinions as to finance or not.

I also see some saying if we are going to finance anyway we shouldn't wait 6 months to save up..we should just do it now because the point values will continue to climb.

Soooo then guys.....If I wanted to buy now with financing..about how much $$$ do I need upfront? If we bought let's say 200 points at AKV....could anyone shed some light on that? Thanks!

And once again..thank you all so much for your input! I find invaluable!

The minimum down payment is 10%, so you would be looking at almost $2,000.

 

[gkrykewy]

A home is a necessity and also an investment, we could make at least 100K on our house we have owed for 4 years, even with the recent home values depreciating.

To paraphrase your previous post, viewing homes like stocks or lottery tickets (and getting excited about paper equity) has also been a major problem in this country in recent years . I mostly agree with everything you're saying, however.

To the OP, if you do purchase, be sure to put your down payment on a Disney Visa (for the bonus $500 reward dollars)!

 

[jodifla]

Everyone has to do what is right for your situation. We purchased last year and financed a large portion of it. Our scheduled yearly cost for payment and dues for the next 9 years is about equal to what we would pay for a week at a deluxe resort. So for money we would spend anyway, we have 40 years ownership remaining which will have some value. Had we just taken the 10 vacations, we would have nothing left ahead of us.

Our DVC membership allowed us to host my entire family in 3 rooms at AKV for the trip that we never got to take when we were kids. We still might not have been able to take it if we were paying cash for those rooms.

We could have saved for 2-3 years to pay cash for the membership before we purchased, but we would never get back those 3 years when our kids are preschool and early elementary aged which have been awesome experiences so far.

If we chose to do so, we could pay it off by the end of this year. So I wish some of you wouldn't be so judgemental on how other people should spend their money everytime this comes up. Money is just paper. Experiences and memories cannot be replaced.

ETA: For those that pay cash or are saving, that is great. I am not here to make it sound like that financing is absolutely the way to go. It is what we thought was right for us at the time. There are pros and cons. Everyone has to evaluate their own situation.

Yep!!! There are certain times it makes sense to finance!

We bought when we were DINKS. Now we have a child, and only 1.5 jobs. We take MUCH nicer vacations than we would if we hadn't bought DVC when back we could easily afford the payments, which are now LONG GONE. And, we would have been saving, only to the point price to keep skyrocketing up, AND we'd be spending money on Disney hotel rooms.

How dumb would that have been???

Now, we only have our dues!